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Saturday, August 16, 2014

Canadian Labour Data: Second Time Lucky

Chart: Canadian Aggregate Employment Growth

The do-over for the July Labour Force Survey for July 2014 was much better than the first go - 42,000 jobs were created in this version, instead of just 200. But as the chart above shows, the year-on-year growth rate for employment is still below 1%. And the details of the report are less buoyant the aggregate job number suggests, as growth was dominated by part-time positions.

Chart: Canadian Full-Time Versus Part-Time Job Growth

The number of full-time positions has nearly stopped dead, while part-work is expanding. Although one could try to pretend that this is the result of voluntary decisions, it looks like weak demand for workers to me. The bottom panel of the chart above shows the percentage of positions that are full time, and this percentage has a pattern of following the cycle. This is a sign that there is considerable spare capacity in the labour market, in the form of underutilised workers.

The unemployment rate ticked down to 7% again. As StatsCan notes, this figure is not directly comparable to the headline (U-3) Unemployment Rate in the United States. Expressed on a U.S.-equivalent basis, the unemployment rate in July was 6.1%, which is slightly below the U.S. level of 6.2%. Meanwhile, Canada did not experience the collapse of the Participation Rate that the United States did (chart below), which flatters the U.S. unemployment rate.

Chart: Canada And U.S. Participation Rates

As an aside, although the drop of the Participation Rate may reflect a somewhat soft labour market, it also reflects demographics. I have not dug into the data, but the Canadian experience casts some further doubt on the robustness of the theory that demographics explains the much larger drop of the Participation Rate in the United States.

(c) Brian Romanchuk 2014

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